NINETEENTH CONGRESS OF TIIE

REPUBLIC OF TIIE PHILIPPINES

First RIgular Session

HOUSE 0F REPRESENTATIVES
HouSEBILLNo.H57

Introduced by REPRESENTATIVES VIRGILI0 S. LACSON AND RODANTE

D. MARCOLETA

EXPLANATORY NOTE

In times of great economic distress, Filipinos come together as a community to

alleviate each other's financial burden. This practice has ripened into a decades-old
system,alsoknownasthepaluwagan.PaluwaganisaTagalogwordthatmeaus``easing
up"- a quite literal denomination of its purpose which is to ease up the each other's
burden.

TheconceptofpaluwaganisnotuniqueinthePhilippinesetting.Althoughnamed
differentlyatdifferentsocieties,theconceptstaysthesame.Eachparticipantgivesafixed
amount as contribution to a pooled fund. The pooled fund will be given to a certain
member who is appointed as the manager of the funds on an agreed date. The money
collected for the period is then given to a person scheduled to receive it. The order of the

payout is usually determined by drawing of lots. The cycle continues until all the
members have received their share.
 The P¢Z#zo¢g#re system has many benefits. First, it inculcates the habit of saving
amongitsmembers.Thedutytocontributetothepoolregularlypromotesaccountability
among the members.

Second, it enables access to a lump sum amount of money, even to the poorest of
the poor. According to a United States Agency for International Development study,
credit access in the Philippines was the most restrictive out of all Association of
Southeast Asian Nations countries in 2015. Since then, certain reforms have been
introduced to improve credit access especially in rural areas. Despite this, access to
credit, insurance, or savings from formal iustitutious for low-income individuals
remains elusive. There are many contributing factors why financial inclusion remains a

problem. One of them is what we call the demand barrier. A demand barrier is a factor
that effectively excludes individuals, especially the poor, from accessing financial
services. It can be socioeconomic or cultural elements, such as lack of formal
identificationsystems,andlowlevelsoffinancialliteracy,1ackofawarenessofavailable
services, inappropriateness of certain services to the needs of the low-income sectors.
Lack of financial inclusion in formal institutions causes people to be creative in
addressing their financial necessities, hence the creation of p¢Z#zo¢gr7t. These
community-based financial systems are accessible even to those who are uneducated.

Thirdly, the system promotes a sense of Z7¢y¢7z!.fe¢7t. It strengthens social and

financial network within a community through unity, responsibility, and cooperation.
Whenamemberfailstopay,itaffectsthebenefitsofotherparticipantsinthep¢J%zo¢g#7t.

Theadvantagesofthesystemarenotwithoutdowusides.Althoughpez#zpng##has
beeninexistencesincetimeimmemorial,thepracticeremainsinformalanduuregulated.
Anyone can form a group through verbal agreements. It is not regulated by any

governlnentalbody.DepartmentofTradeandlndustry(DTI)oncetaggedthepflz#zo¢g##
system as a form of pyramid scheme, because of the fact that the first person to receive
thepotisactuallytheonewhowillgetthemostbenefitfromthesystem.Thelastpersous

2
to receive the pooled funds have the highest risk in case other participants fail to pay and
the system collapses. Since the system only relies on trust, it also becomes prone to fraud.
Since most p¢Z#zong#7t system is uuregistered and undocumented, it is hard to prove
claims of losses and damages in court.

This bills aims to regulate the p¢Zt"ng¢7t system by creating an independent

agencycalledP¢Zc{zong¢77Mi.c7io¢7ifl7tceAdministration.TheAdministrationshallprescribe
rules and regulations for the creation and registration of p¢Zt"ng¢77, and shall exercise the

power of supervision over registered paluwagans. The bill also provides for the creation
of the P¢Z#an¢g#7i Insurance Fund, which aims to protect members of insured paluwagan
in case of cessation of business.

This bill principally aims to provide an avenue for the Filipino people to achieve
financial autonomy and self-sufficiency, by promoting entrepreneurship and providing
them with affordable credit and financial assistance. It is hoped that the formalization
and strengthening of the paluwagan microfinance system, as well as the establishment of
the Paluwagan Microfinance Administration, shall contribute to the realization of the

people's aspirations towards financial stability and self-reliance.

For the foregoing reasons, the passage of this bill is earnestly sought.

Manila Teachers Party-list

3
NINETEENTH CONGRESS OF TIIE
REPUBLIC OF THE PHILIPPINES
First Regular Sesston

HOUSE OF REPRESENTATIVES
HoUSE BILL NO.7JE7

Introduced by REPRESENTATIVES VIRGILI0 S. LACSON AND

RODANTE D. MARCOLETA

AN ACT
PROVIDING FOR THE REGULATION OF ORGANIZATION AND OPERATION
0F COMMUNITY MICROHNANCE GROUPS ALSO KNOWN AS
PALUWAGAN, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House Of Rlepresentatives Of the Phittppines in Congress

assembled:

CHAPTER I
Title and Definitions

SECTION 1. Title - This Act may be cited ais ``Colrmunity P¢Z%zo¢g#re

Morofirance AIct."

SEC. 2. Declaration of Policies. - The State hereby declares its policy to pursue
a program that emboldens the people to achieve financial autonomy through
capacity building and self-financing activities. The Filipino people shall be
encouraged to come together and undertake serf-financing activities to inspire
themtocultivateacultureofentrepreneurship,meettheirbasicneeds,improve
their financial resources, and promote income security.
In this regard, the State shall place great importance on facilitating easy and
efficient access to necessary funds and credits, for they are crucial elements in
realizing the people's aspirations towards financial stability and self-reliance.

To achieve this end, the paluwagan, a traditional community microfinance

system, shall be formalized and strengthened for the protection and benefit of
the people. Through this system, the people shall have access to affordable
credit and financial assistance, and they shall be empowered to engage in
entrepreneurial activities and other forms of self-sustenance.

SEC.3. Definitions - As used in this Act, the term -

Co77z77€"7!t.fy P¢Zwzung¢7z refers to a microfinance group that caters to a select

group of persons with residence or employment in a defined community,

created in accordance with the provisions laid out in this Act, for the noble

purpose of instilling a culture of entrepreneurship, while simultaneously

promoting their financial welfare by providing them with a ready source of
credit for provident and productive objectives.

Chairman refers to the Chairman of the Pflz#zung#7t Microfinance

Administration;

Administration refers to the P¢Zc"¢g#7t Microfinance Administration,.

Board refers to the Pflz#zo¢gr7£ Microfinance Administration Board;

Member means a person who holds an account in the p¢Zwzo¢g#7!, which

evidences member's contribution (hulog) received or held in the usual course
of business and for which it has given or is obligated to give credit to the
account of the member;

Paluwagan refers to a duly registered Corrmunity Pflzt"ngfl7t,.

Board of Trustees refers to the Board of Trustees of a registered P¢Zw"ng¢77.

CHAPTER 11

P¢Zwzt)#g#77 Microfinance Administration

SEC. 4. Creation of P¢Zctzo¢g#7t Microfinance Administration - There is hereby

established in the executive branch of the Government an independent agency
to be known as the P¢Zz4zu¢g#7t Microfinance Administration, which shall be
under the management of the P¢Zc{zo¢gr77 Microfinance Administration Board.

SEC. 5. Membership of the Board -The Board shall consist of three members,
who are broadly representative of the public interest, appointed by the
PresidentofthePhilippinesuponcousultationandrecommendationofexisting

paluwagan. In appointing the members of the Board, the President shall

designate the Chairman.

Pending the appointments by the President of the Philippines to the Inaugural

Paluwagan NIcrofinance Administration Board, an interim board shall be
established to oversee the operations of the Paluwagan Microfinance
Administration. The interim board shall consist of the Secretary of the
Department of Trade and Industry, the Commissioner of the Insurance
Commission, and the Chairman of the Securities and Exchange Commission,
ortheirdesignatedrepresentatives.Theinterimboardshallhaveallthepowers
and duties of the Paluwagan Microfinance Administration Board until such
time as the initial appointments to the Board have been made by the President
ofthePhilippines.TheSecretaryoftheDepartmentofTradeandlndustryshall
serve as interim Chairman.

SEC. 6. Qualifications of Board Members -

(A)ExperienceinFinancialServices-IncousideringappointmentstotheBoard
under the preceding section, the President shall give consideration to
individuals who, by virtue of their education, training, or experience
relating to a broad range of financial services, financial services regulation,
or financial policy, are especially qualified to serve on the Board.

(8) Limitations - Not more than one member may be appointed to the Board
from among individuals who, at the time of the appointment, are involved
with any p¢Zt"ng¢7t as a trustee, committee member, officer, or employee.

SEC. 7. Term of Office - Each member of the Board shall have a term of 6 years,
except that of the two members, other than the Chairman, initially appointed
shall expire, one upon the expiration of two years from date of appointment,
and the other upon the expiration of four years from the date of appointment.
In no case shall there be re-appointments.

In the event of death, resignation, removal of a member, the successor shall

only serve the unexpired portion of the term of the predecessor.

SEC. 8. Functions of the Board. - The management of the Administration shall

be vested in the Board. A majority of the Board shall constitute a quorum.
Among its functions -

(i) the Board shall adopt such rules as it sees fit for the transaction of its
business and shall keep permanent and complete records and minutes
Of its acts and proceedings.

(ii) the Board is authorized and empowered to require that every person
appointed or elected by any pflz#zong¢7i to any position requiring the
receipt, payment, or custody of money or other personal property
owned by a pflz#zong#%, or in its custody or control as collateral or
otherwise, give bond in a corporate surety company duly registered in
the Philippines, any such bond or bonds shall be in a form approved by
 the Board with a view to providing surety coverage to the p¢Zg4zu#g#7i
with reference to loss by reason of acts of fraud or dishonesty including
forgery, theft, embezzlement, wrongful abstraction, or misapplication
on the part of the person, directly or through connivance with others,
and such other surety coverages as the Board may determine to be
reasonably appropriate or as elsewhere required by this Act.
Any such bond or bonds shall be in such an amount in relation to the
money or other personal property involved or in relation to the assets of
the pflzc"¢g¢7t as the Board may from time to time prescribe by
regulation for the purpose of requiring reasonable coverage. In lieu of
individual bonds the Board may likewise approve the use of a form of
schedule or blanket bond which covers all of the officers and employees
of a p¢Zz4zong#7t whose duties include the receipt, payment, or custody of
money or other personal property for or on behalf of the pez#zongfl7t.

(iii) The Board is authorized in carrying out its functions under this Act to
appoint such personnel as may be necessary to enable the
Administration to carry out its functions.

(iv) The Board is authorized to expend such funds, enter into such contracts
with public and private organizations and persons, make such
payments in advance or by way of reimbursement, acquire and dispose
of,byleaseorpurchase,realorpersonalproperty,withoutregardtothe

provisions of any other law applicable to executive or independent

agencies of the Philippines, and perform such other functions or acts as
it may deem necessary or appropriate to carry out the provisions of this
Act, in accordance with the rules and regulations or policies established
by the Board not inconsistent with this Act.

(v) The Board shall make an annual report to the congress through the
Committee on Micro, Small, Medium Enterprise Development
Committee of the House of Representatives. Such a report shall
summarize the operations of the Administration and set forth such
information as is necessary f or the Congress to review the financial
program approved by the Board.
(vi) The financial transactions of the Administration shall be subject to audit
by the Commission on Audit. Audit shall be conducted at the place or

places where the accounts of the Administration are kept.

(vii) Upon recommendation of the Board, the Administration may invest and
reinvest such portions of the annual operating fees deposited under this
Act as the Board determines are not needed for current operations. Such
investments may be made only in interest bearing securities of the
Government of the Philippines. All income derived from such
investments and reinvestments shall be deposited to the account of the
Adhinistration.
(viii) The Board shall fix the compensation and number of, and appoint and
direct, employees of the Administration, in accordance with the
applicable laws on government employee compensation.

(ix) The Board shall provide technical assistance to duly registered

paluwagan in the efficient management and operation of their
respective microfinance systems. This includes the conduct of
specialized training programs that are carefully crafted to equip
members with vital knowledge, skills, and competencies necessary for
their business operations and for enhancing their entrepreneurial skills.

SEC. 9. Chairman of the Board - The Chairman of the Board shall be the
spokesman for the Board and shall represent the Board and the Administration
in its official relations with other branches of the Government.

TheChairmanshalldetermineeachBoardmember'sareaofrespousibilityand
shall review such assignments bi-annually. It shall be the Chairman's
responsibility to direct the implementation of the adopted policies and
regulations of the Board.

CHAPTER Ill
community p¢z#zong#7i
SEC. 10. Creation of a Community Pflzztzo¢g#7t - Any seven or more persons with
residence or employment in a defined community, who desire to form a
community pflz#zuflgce7t shall apply either before the Administration who shall
approve the creation of said microfinance group. The application shall
specifically state:

(1) Name of the communrty p¢Zztzong#7z

(2) Location of the proposed community p¢Z#zo¢gan

(3) Names and Addresses of the members
(4) Proposed field of membership
(5) Term of existence, not exceeding 50 years, renewable for another 50
years upon approval of the Administration
(6) Articles of the pez#"¢g#7i
(7) By-Laws

SEC. 11. Application -In order to simplify the organization of p¢Z„zong#7t, the
Board shall from time to time cause to be prepared a form of application and a
formofbylaws,consistentwiththisAct,whichshallbeusedbyapplicants,and
shall be supplied to them on request.

Beforeanyapplicationisapproved,anappropriateinvestigationshallbemade
for the purpose of determining: a) whether the p#Zc"¢gow conforms to the

provisions of this Act, b) the general character and fitness of members, c)

economic viability of establishing the proposed p¢Z#zong##.

The Board may prescribe the payment of reasonable amount of fees for the

processing of application under this provision.

SEC. 12. Powers and Functions of a pflz#co¢gan - Upon approval of the creation
of a p¢Z#zo¢g#7t, a certificate shall be issued by the Administration. The
certification shall grant the p¢Z#zong#7z the authority to exist as body corporate
and as such, subject to the limitations herein contained, shall be vested with all
of the powers and charged with all of the liabilities conferred and imposed by
this Act, which includes the power:

(1) to make contracts;

(2) to sue and be sued;
(3) to adopt and use a common seal and alter the same at pleasure;
(4) to purchase, hold, and dispose of property necessary, incidental, or
beneficial to its operations;

(5) to make loans, the maturities of which shall not exceed 30 years,
except as otherwise provided herein, and extend lines of credit to its
members, in accordance with the following:

a. loans to members shall be made in conformity with criteria

established in the By-laws of the p¢Z#zong#7t. Provided, That -

(i) a residential real estate loan on a family dwelling, that is

or will be used as the principal residence of a pflJz4"¢g##
member, and which is secured by a first lien upon such
dwelling, may have a maturity not exceeding thirty years
or such other limits as shall be set by the Board, subject to
the rules and regulations of the Board;

(ii) a loan or aggregate of loans to a trustee or member of the

supervisory or credit committee of the pflzwzu#gr7z making
the loan which exceeds 5,000,000 Philippine Pesos, be
approved by the board of trustees of the p¢Zctzo¢g#7!;

provided that the said trustee or member has no

participation in the approval of said loan;
(iii) loans to other members for which trustees or members of
the supervisory or credit committee act as guarantor or
endorser be approved by the board of trustees of the

p#Z#co¢g#7t when such loans standing alone or when added

to any outstanding loan or loans of the guarantor or
 endorser exceeds the amount of 5,000,000 Philippine
Pesos;

(iv) loans shall be paid or amortized in accordance with rules

and regulations prescribed by the Board after taking into
account the needs or conditions of the borrowers, the
amounts and duration of the loans, the interests of the
members, and such other factors as the Board deems
relevant;

(v) loans mustbe approved by the credit committee or a loan

officer;

(vi) the rate of interest is reasonable;

(vii) a self-replenishing line of credit to a borrower may be
established to a stated maximum amount on certain terms
and conditions which may be different from the terms and
conditions established for another borrower;

Provided, however, that a p¢Zc4zong¢7z shall not commit itself to

makeanyloansforamountsinexcessofthetotalofthefollowing
amounts:

1) amount of cash available for loan purposes;

2) amount of cash which can be readily realized upon the

sale or redemption of permissible investments made by
the pahawagan; and

3) amount of credit available for loan purposes from

government or private financing iustitutious;

Provided further, any government office, agency, or

iustrumentality employing a paluwagan member is required,
notwithstanding the provision of any existing law, rule and
regulation to the contrary, to make deductions from his salary,
wage, income or retirement pension pursuant to the terlns of his
 loan, and all other deductions authorized by the member, to remit
such deductions to the paluwagan concerned, and to collect such
reasonable fee for his services as may be authorized by rules

promulgated by the Board.

(6) to receive from its members payments, representing member's

contribution (hulog) which shall be evidenced by a certificate of
membership;
(7) to invest its funds in accordance with rules and regulations
prescribed by the Board, in the total amount not exceeding 25 per
centum of its paid-in and uninpaired capital;
(8) to borrow, in accordance with such rules and regulations as may be
prescribed by the Board, from any source, in an aggregate amount
not exceeding 50 per centum of its paid-in and unimpaired capital
and surplus;
(9) to levy late charges and penalties, in accordance with the by-laws,
for failure of members to meet promptly their obligations to the

paluwagan.,
(10)to impress and enforce a lien upon the member's contribution
(hulog) of any member, to the extent of any loan made to him and
any dues or charges payable by him;
(11 )in accordance with regulations prescribed by the Board -
(i) to sell to persons in the field of membership negotiable
checks (including travelers checks), money orders, and
other similar money transfer instruments (including
international and domestic electronic fund transfers and
remittance transfers), and;

(ii) to cash checks and money orders for persons in the field of
membership for a fee;

(iii) to issue credit cards;

 (iv) to engage existing digital platforms, or other financial
technologies that may be devised in the future, to enhance
or automate financial services for members;

(12)in accordance with rules and regulations prescribed by the Board, to

purchase, sell, pledge, or discount or otherwise receive or dispose
of, in whole or in part, any eligible obligations (as defined by the
Board) of its members and to purchase from any liquidating notes
made by individual members of the liquidating p#Zc4zu¢gow at such

prices as may be agreed upon by the board of trustees of the

liquidating p¢Z#zu#gr7t and the board of trustees of the purchasing

pflzttavngfl7t, but no purchase may be made under authority of this

paragraph if, upon the making of that purchase, the aggregate of the
unpaid balances of notes purchased under authority of this

paragraphwouldexceed5percentumoftheunimpairedcapitaland
surplus of the p¢Z#zo¢g¢77;

(13)to sell all or a part of its assets to another p¢Z#zo¢gr7i, to purchase all
orpartoftheassetsofanotherp¢Z#zong¢rzandtoassumetheliabilities
of the selling p¢Zc/zo¢g#77 and those of its members subject to
regulation of the Board;
(14)to invest in securities that are offered and sold pursuant to Section
3, Chapter I of Republic Act no. 8799, subject to such regulation as
theBoardmayprescribe,includingregulationprescribingndnimum
size of the issue at the time of initial distribution, minimum
aggregate sales prices, or both;
(15) to exercise such incidental powers as shall be necessary or requisite
to enable it to carry on effectively the business for which it is
incorporated.

(16)to provide additional services for the mutual benefit of its members,
upon approval of the Board. Provided, that such services involve no
risk to the assets of the p¢J#zong4z7t or the funds of its members;
 (17)Notwithstanding any other provision of law, to accept investment
from a minimum seven persons within the defined community for
thepurposeofaugmentingresourcesandincreasingliquidityforthe

purpose of providing credit line to the development of micro, small

and medium-sized businesses. The contributors shall be members of
the p¢Zwzo¢g¢7t, and shall be subject to the same terms and conditions
of membership as other members. The p¢Z#zo¢gfl7t shall have the
discretion to determine the terms and conditions of the investments,
including the amount of the investment, the duration of the
investment, and the potential return on the investment. The
z7¢ZwttJflg#ri shall also have the discretion to limit the amount of
investments it will accept;
(18)To collect member's contribution thulog) from its members upon
admission, and distribute such member's contribution thulog), plus
any interest and earnings thereon, to the members after a certain
period of time as share in the paluwagan's income. The z7flzz"¢g#7!
shall have the discretion to determine the frequeney and amount of
such distributions, based on the pflJ#zo¢gr7t's financial performance
and other factors.

No person, association, partnership or corporation shall do business, or hold

itself out as doing business, as a p¢Z"zo¢g#7t, or shall use the term"

p¢Zc"flg#7z " or any other title or name tending to give the public the impression
that it is engaged in the operations and activities of a p¢Zz/"¢gow, unless so
authorized under this Act.

SEC. 13. Duties of the p#Zztzung#7t - In accordance with rules prescribed by the
Board, each p¢Z#w¢gr7t shall pay to the Administration an armual operating fee
which may be composed of one or more charges identified as to the function or
functions for which assessed.
Thefeeassessedunderthissectionshallbedeterminedaccordingtoaschedule,
or schedules, or other method determined by the Board to be appropriate,
which gives due consideration to the expenses of the Administration in
carrying out its responsibilities under this Act and to the ability of pflzgt"ng#7€ to

pay the fee.

The Board shall, among other things, determine the periods for which the fee
shall be assessed and the date or dates for the payment of the fee or increments
thereof.

All operating fees shall be for the account of the Administration and may be
expended by the Board to defray the expenses incurred in carrying out the
provisiousofthisActincludingtheexaninationandsupervisionofp¢Zztzong#72.

CHARER IV
Membership

SEC.14.Membership-Eachmembershallinvestanamountwhichrepresents
capitalcontribution,andpaytheinstallmentsthereon,asmaybeprescribedby
the Bylaws.

SEC. 15. Membership Field - The membership of any p¢Z#zo¢gr# shall be

limitedtoadefinedcommunity,whichshallbesetoutinby-laws.

SEC. 16. Additional membership eligibility - No individual shall be eligible for

membershipinap¢Zwzu¢ganonthebasisoftherelationehipoftheindividualto
another person who is eligible for membership in the p¢Zztzong##, unless the
individual is within the second degree of consanguinity of the member.
SEC. 17. Retention of membership - Except as provided in this Act, once a

person becomes a member of a p¢Zz"¢gan in accordance with this title, that

person or organization may remain a member of that p¢Z#zong¢7i until the
person or organization chooses to withdraw from the membership.

SEC. 18. General membership meeting - The annual meeting of each p#Z#zo¢g#7®
shall be held at such place as its bylaws shall prescribe. Special meetings may
be held in the manner indicated in the bylaws.

Unless otherwise provided by the Articles and Bylaws of the pflzz4zong#7t, a

member shall be entitled to vote by proxy.

SEC. 19. Expulsion of members - A member may be expelled for cause by

majority vote of the board of trustees, ratified by majority vote of the all
members of a p¢Z#zo#gr77 present at a special meeting called for the purpose,
but only after opportunity has been given to the member to be heard.

The board of trustees of a pez#zp¢g#7t may, by majority vote of a quorum of

trustees, adopt and enforce a policy with respect to expulsion from
membership based on non-participation by a member in the affairs of the
paluwagan.

In establishing its policy, the board of trustees should consider a member's

failure to vote in the p¢Zztzu¢g#ro elections, failure to obtain or pay loan from

p¢Z#zo¢g#7t, among others. If such a policy is adopted, written or digi notice of

the policy and the effective date of such policy shall be mailed to each member
of the p¢Z#ro¢gr7z at the member's current address appearing on the records of
the p¢Zt"¢g#7t within 10 days from the adoption of of such policy. In addition,
each new member shall be provided written notice of any such policy prior to
or upon applying for membership.
The term ``cause" under this section shall mean a substantial or repeated
violation of the membership agreement of the p¢Zt"¢g#7t; a substantial or
repeated disruption, including dangerous or abusive behavior to the
operations of a p¢Z#zt7¢gr7i; or fraud, attempted fraud, or other illegal conduct
that a member has been convicted of in relation to the p¢Z#zong#7t, including the
employees conducting business on behalf of the p¢Z#zong#77.

Expulsion of a member pursuant to this section shall not operate to relieve the
member from any civil or criminal liability to the p¢Z#zong#7t.

SEC. 20. Due process - If a member will, subject to the policy adopted herein,
be subject to expulsion, the member shall be notified in advance of the
expulsion, along with the reason for such expulsion. Such notice shall be

provided in person, by mail to the member's address, or, if the member has
elected to receive electronic communications from the pflzwzong¢7t, may be

provided electronically.

A member shall have 30 days from the date of receipt of such notification
requestahearingfromtheboardoftrusteesofthepflzt4rong#7i.Ifamemberdoes
not request a hearing during the 30-day period as described, the member shall
be expelled after the expiration of the 30-day period.

If a member requests a hearing during the 30-day period as described, the

board of trustees of the p¢Z#w¢g## shall provide the member with a hearing
within 30 days from receipt of request; and after such hearing, the board of
trustees of the pezc4zu¢g¢rz shall hold a vote within 15 days whether or not to
expel the member. If a member is expelled pursuant to the decision of the
Board, the notice of the expulsion of the member shall be provided to the
memberinpersonorbymailtothemember'saddress,inwrittenformor,if the
member has elected to receive electronic corrmunicatious from the p¢Z#zo¢gr7i,
may be provided electronically.
The expulsion of a member pursuant to this Act shall be done individually, on
a case-by-case basis, and neither the Administration nor any pflzwtt7ngfl7t may
expel a class of members.

SEC. 21. Reinstatement -A member expelled under this section shall be given
an opportunity to request reinstatement of membership; and may be reinstated
by either a majority vote of a quorum of the trustees of the p¢Z#zong#7t; or a
majority vote of the members of the pflzwzong¢7t present at a meeting called for
such purpose.

CHAPTER V
Management

SEC. 22. Management of P¢Zwzu¢gow - The management of a p¢Z#zong¢7t shall be

by a board of trustees, a supervisory corrmittee, and a credit conrmittee. The
board of trustees shall consist of an odd number of trustees, at least five in
number, to be elected annually by and from the members as the bylaws
provide. Any vacancy occurring on the board shall be filled until the next
annual election by appointment by the remainder of the trustees.

At their first board meeting, the trustees shall appoint corporate officers
specified in the bylaws, which shall include a President, Secretary, and
Treasurer. Corporate officers may be compensated in accordance with the
industry standard. The bylaws shall specify the specific duties of each
corporate officer.

SEC. 23. Composition of Supervisory and Credit Committee - The Committee

members shall be appointed by the board of trustees and shall consist of not
less than three members nor more than five members.
A record of the names and addresses of the executive officers, members of the
supervisory committee, credit committee, and loan officers, shall be filed with
the Administration within ten days after their election or appointment.

SEC. 24. Compensation - No member of the board of trustees or of any other

committee shall, as such, be compensated. Per diems, health, accident, similar
insurance protection, and the reimbursement of reasonable expenses incurred
in the execution of the duties of the position shall not be considered
compensation.

SEC. 25. Meetings of the Board of Trustees- The board of trustees shall meet at
leastonceamonthandshallhavethegeneraldirectionandcontroloftheaffairs
ofthep¢Zttzong¢7t.MinutesofallmeetingsshallbekeptbytheSecretary.

Among other things, the board of trustees shall -

(1) act upon applications for membership or appoint employees from

among the members of the p¢Zctzu¢g#7i, which shall include an internal
auditor, and a loan officer;

(2)provideadequatefidelitycoverageforofficersandemployeeshaving
custody of or handling funds according to regulations issued by the
Board;

(3) fill vacancies on the board of trustees until successors elected at the
next annual meeting have qualified;

(4) have charge of investments including the right to designate an

investment committee of not less than two to act on its behalf;

(5) subject to any limitations of this Act, determine the interest rates on
loans,thesecurity,andthemaximumamountwhichmaybeloanedand

provided in lines of credit;

(6) if the bylaws so provide, appoint one or more loan officers and
delegate to these officers the power to approve or disapprove loans,
lines of credit, or advances from lines of credit;
 (7) subject to the limitations of this title and the bylaws of the p¢Z#zung#7t,
provide for the hiring and compensation of officers and employees;
(8) if the bylaws so provide, appoint an executive corrmittee of not less
thanthreetrusteestoactonitsbehalfandanyothercommitteestowhich
it can delegate specific functions;

(9) prescribe conditions and lirnitatious for any comlnittee which it

appoints;

(10) review at each monthly meeting a list of approved or pending

applications for membership received since the previous monthly
meetingtogetherwithsuchotherrelatedinformationasitorthebylaws
require;

(11) provide for the furnishing of the written reasons for any denial of a
membershipapplicationtotheapplicantuponthewrittenrequestofthe
applicant;

(12) establish and maintain a system of internal controls consistent with

the regulations of the Administration;

(13) establish lending policies; and

(14) do all other things that are necessary and proper to carry out all the
purposes and powers of the p¢Z#zong#7t, subject to regulations issued by
the Board.

CHAPTER VI
Conrfuttees

SEC. 26. Committee meetings - The committees created by the board of trustee
shallholdsuchmeetingsasthebusinessofthep¢Z#zong#7imayrequire,notless
frequently than once a month.

SEC.27.FunctionsoftheSupervisoryCommittee-Thesupervisorycommittee
shall have the following functions:
(i) make or cause to be made an annual audit and shall submit a report of
that audit to the board of trustees and a sulnmary of the report to the
members at the next annual meeting of the p¢Z#"ng##.

(ii) make or cause to be made such supplementary audits as it deems

necessary or as may be ordered by the Board, and submit reports of the
supplementary audits;
(iii) by a unanimous vote, suspend any officer of the pflz#"ng¢7t or any
member of the credit committee or of the board of trustees, for a
maximum period of 30 days or until the next members' meeting,
whichever comes first, at which meeting any such suspension shall be
acted upon by the members;
(iv) call by a majority vote a special meeting of the members to consider any
violation of this Act, the charter, or the bylaws, or any practice of the

p¢Zztco¢g#7! deemed by the supervisory committee to be unsafe or

unauthorized.

Any member of the supervisory committee may be suspended by a majority

vote of the board of trustees. The members shall decide, at a meeting held not
less than seven nor more than fourteen days after any such suspension,
whether the suspended comlnittee member shall be removed from or restored
to the supervisory committee.

The supervisory committee shall cause the passbooks and accounts of the
members to be verified with the records of the treasurer from time to time, and
not less frequently than once every two years. As used in this section, the term
``passbook" shall include any book, statement Of account, or other record

approved by the Board for use by p¢Zc"ng¢7z.

SEC. 28. Functions of the Credit Committee -The Credit Committee shall have
the following functions:
(i) appoint and delegate to loan officers the authority to approve
applications;

(ii) all applications not approved by the loan officer shall be reviewed by
the credit committee, and the approval of a majority of the members
who are present at the meeting when such review is undertaken shall be
required to reverse the loan officer's decision provided a majority of the
full conndttee is present.

CHAPTER VII
Regulation

SEC. 29. Regulation of Paz%ttJng#re -The Board may prescribe rules and
regulations for the administration of this Act. Any duly registered p¢Zg4zt7ng¢#
shall be subject to such rules, regulations, and orders as the Board deems
appropriate and, except as otherwise specifically provided in such rules,
regulations, or orders, shall be vested with or subject to the same rights,

privileges, duties, restrictions, penalties, liabilities, conditions, and lirfutatious

that would apply to all p#Z#co¢gr7z under Act.

SEC. 30. Power to revoke and suspend - The Board may suspend or revoke the
registrationofanypflz#zong¢7z,orplacethesameininvoluntaryliquidationand
appoint an authorized liquidating agent therefor, upon its finding that the
organization is bankrupt or insolvent, or has violated any of the provisions of
its charter, its bylaws, this Act, or any regulations issued thereunder.

The Board, through such persons as it shall designate, may examine any

p¢Z#co¢g#re in voluntary liquidation and, upon its finding that such voluntary
liquidation is not being conducted in an orderly or efficient manner or in the
best interests of its members, may terminate such voluntary liquidation and

place such organization in involuntary liquidation and appoint a liquidating

agent therefor.
Such liquidating agent shall have power and authority, subject to the control
andsupervisionoftheBoardandundersuchrulesandregulatiousastheBoard
may prescribe -

(i) to receive and take possession of the books, records, assets, and
property of every description of the p¢Zztzo¢gr7t in liquidation,
(ii) to sell, enforce collection of, and liquidate all such assets and
property, to compound all bad or doubtful debts, and to sue in
hisownnameorinthenameofthep¢Zz4"¢g##inliquidation,and
defendsuchactionsasmaybebroughtagainsthinasliquidating
agent or against the p¢Zc"¢gap,.

(iii) to receive, examine, and pass upon all claims against the
p¢Zcf rong¢7i in liquidation, including claims of members on
member accounts;

(iv) to make distribution and payment to creditors and members as

their interests may appear; and
(v) to execute such documents and papers and to do such other acts
and things which he may deem necessary or desirable to
discharge his duties hereunder.

Subject to the control and supervision of the Board, and under such rules and
regulatiousastheBoardmayprescribe,theliquidatingagentofap¢Z#zu¢g¢#in
involuntaryliquidationshallcausenoticetobegiventocreditorsandmembers
to present their claims and make legal proof thereof, which notice shall be

published once a week in each of three successive weeks in a newspaper Of

general circulation in the place in which the p¢Z#zt)ng## in liquidation
maintained an office or branch for the transaction of business on the date it
ceased unrestricted operations.

Upon certification by the liquidating agent in the case of an involuntary

liquidation,anduponsuchproofasshallbesatisfactorytotheBoardinthecase
ofavoluntaryliquidation,thatdistributionhasbeenmadeandthatliquidation
has been completed, as provided herein, the Board shall cancel the charter o£
such p¢Z#zu¢g¢7i; but the corporate existence of the p¢Z#zong#„ shall continue for
a period of three years from the date of such cancellation of its charter, during
which period the liquidating agent, or his duly appointed successor, or such

persons as the Board shall designate, may act on behalf of the p¢Z#zo¢g¢73 for the
purpose of paying, satisfying, and discharging any existing liabilities or
obligations, collecting and distributing its assets, and doing all other acts
required to adjust and wind up its business and affairs, and it may sue and be
sued in its corporate name.

After the expiration of five years from the date of cancellation of the charter of
a p¢Z#zo¢g#7t, the Board may, in its discretion, destroy any or all books and
records of such p¢Zctzo¢g#7z in its possession or under its control.

CHAPTER VIII
P¢Z#zo¢gr77 Insurance Fund

SEC.31.Pflz#zo#gr73Insurance-TheBoard,ashereinafterprovided,shallinsure
the member accounts of all pflhacong¢ro to the extent of amount as they may
determine.

ApplicatiousforsuchiusuranceshallbeinsuchformastheBoardshallprovide
and shall contain an agreement by the applicant-

(1) to pay the reasonable cost of such examinations as the Board may deem
necessaryinconnectionwithdeterminingtheeligibilityoftheapplicant
foriusurance:Provided,ThatexaminatiousrequiredunderthisActshall
besoconductedthattheinformationderivedtherefrommaybeutilized
for insurance purposes;

(2) to permit and pay the reasonable cost of such examinations as in the
judgment of the Board may from time to time be necessary for the
protection of the fund and of other insured p¢Zttzong¢7t;
 (3) to provide protection and indenmity against burglary, defalcation, and
other similar insurable losses, of the type, in the form, and in an amount
at least equal to that required by the laws under which the p¢Z#cong## is
organized and operates;

(4)tomaintainsuchspecialreservesastheBoard,byregulationorinspecial
cases, may require for protecting the interest of members or to assure
thatallinsuredp¢Zztzong¢romaintainregularreservesasmayberequired
by the Board

(5)TopaythepremiumchargesforinsuranceimposedbythisChapter;and
(6) To comply with the requirements of this title and of regulations
prescribed by the Board pursuant thereto.

Beforeapprovingtheapplicationofanypez#rong#Hforinsuranceofitsmember
accounts, the Board shall consider -

(A) the history, financial condition, and management policies of the

applicant;

(8) the economic advisability of insuring the applicant without undue

risk of the fund;

(C)thegeneralcharacterandfitnessoftheapplicant'smanagement;
(D) the convenience and needs of the members to be served by the
applicant; and

(E) whether the applicant is a p¢Z#"¢g#ro organized for the purpose of

creatingasourceofcreditforentrepreneurialorproductivepurposes.

(2) The Board shall disapprove the application of any p#Z#zung#ro for insurance
of its member accounts if it finds that its reserves are inadequate, that its
financialconditionandpoliciesareuusafeoruusound,thatitsmanagementis
unfit, that insurance of its member accounts would otherwise involve undue
risk to the fund, or that its powers and purposes are inconsistent with the

promotion of a culture of entrepreneurship, and the creation of a source of

credit for provident or productive purposes.
Upon the approval of any application for insurance, the Board shall notify the
applicantandshallissuetoitacertificateevidencingthefactthatitis,asofthe
dateofissuanceofthecertificate,aninsuredp¢Z#zong#%undertheprovisiousof
this title.

SEC. 32. Irrsurance Premium Charges. - Each insured p¢Z%ztJng## shall, at such
times as the Board prescribes (but not more than twice in any calendar year),

pay to the Fund a premium charge for insurance in an amount determined by

the Board.

SEC.33.Paymentofinsurance.-Paymentofaninsuredatcounttoanyperson
by the Administration sham discharge the Administration of the liability of
insurance. The Administration may withhold payment Of such portion of the
insured amount of any member in a closed p¢Z#zo¢g#re as may be required to

provide for the payment of any liability to the closed pflz#zung¢re or its receiver,
which is not offset against the claim due from such p¢Z#zo¢gr7t, pending the
determination and payment of such liability by such member or any other

person liable therefor.

SEC. 34. Prohibitions on insured p¢Zz"ngfl7t. - No insured p¢Zz4zng## may be

spousored by or accept financial support, directly or indirectly, from any
Government-sponsored enterprise. This provision shall , not be construed as

prohibiting any employee of a Government-spousored enterprise from

becomingamemberofap¢Z#"¢gr71.

SEC. 35. Reports of Condition - Each insured pez#zu¢g#ra Shall make reports of
condition to the Board upon dates which shall be selected by them. Such
reports of condition shall be in such form and shall contain such information
as the Board may require.
 The reporting dates selected for reports of condition shall be the same for all
insured pflz#zo¢g#ro except that when any of said reporting dates is a
nonbusiness day for any p¢Z#zong#ro the preceding business day shall be its
reporting date.

ThetotalamountofthememberaccountsOfeachiusuredp¢Zttzng¢roasOfeach
reportingdateshallbereportedinsuchreportsofconditioninaccordancewith
regulations prescribed by the Board. Each report of condition shall contain a
declaration by the president, by a vice president, by the: treasurer, or by any
other officer designated by the board of trustees of the reporting p¢Z#zongfl# to
make such declaration, that the report is true and correct to the best Of such
officer's knowledge and belief.

UnlesssuchrequirementiswaivedbytheBoard,thecorrectnessofeachreport
of condition shall be attested by the signatures of three 'of the officers of the
reportingp¢Z#zo¢g#rowiththedeclarationthatthereporthasbeenexaminedby
them and to the best of their knowledge and belief is true and correct.

TheBoardmaycallforsuchotherreportsasitmayfromtimetotimerequire.
The Board may require reports Of condition to be published in such marmer,
not inconsistent with any applicable law, as it may direct.

Reportsrequiredunderthissectionshallbesopreparedthattheycanbeused
for insurance purposes.

SEC.36.Uusafeandunsoundpractice-IftheBoardshallfindthatanyunsafe
or unsound practice or violation specified in this Act has been established and
hasnotbeencorrectedwithinthetimeaboveprescribedbytheBoardinwhich
to make such correction, the Board may order that the insured status of the

pflJ%zo¢g#rebeterminatedonadatesubsequenttosuchfindingafterduenotice
and hearing. The Administration may publish notice of such termination and
the p¢jztzong¢71 shall give notice of such termination to each of their members at
the last address of record on the books of the p¢Zw"¢gr77, in such a manner and
at such at time as the Board may find to be necessary and may order for the

protection of the members.

The Board may treat the failure of any insured p¢Z#zong¢7t to obtain an outside,
independent audit for any fiscal year for which such audit is required as an
unsafe or unsound practice.

SEC.37.Accounting-Accountingprinciplesapplicabletoreportsorstatements
required to be filed with the Board by each insured pflz#zong¢7i shall be uniform
and corrsistent with generally accepted accounting principles.
SEC. 38. Report to Independent Auditor - Each insured paluwagan which has
engaged the services of an independent auditor to audit such institution for the

past 2 years shall transmit to such auditor a copy of the most recent report of
condition made by such paluwagan, and a copy of the most recent report of
examination received by such credit union.

SEC. 38. Requirements governing insured paluwagan - Insured paluwagan

must meet net worth standards, lending limits, and investment restrictions to
be eligible for insurance. The Administration shall have the power to establish
and enforce these standards and restrictions.

SEC. 39. Termination of insured paluwagan status - The Board shall have the

power to terminate a paluwagan's insured status if it fails to meet the

requirements for insurance.

SEC. 40. Special assistance to avoid liquidation - The Board shall have the

power to provide special assistance to paluwagan in danger of insolvency to

help them avoid liquidation. The Board shall have the power to recommend
including changes in management or operations.
SEC. 41. Nondiscriminatory provision - Insured paluwagan must not
discriminateintheprovisionoffinancialservicesbasedonfactorssuchasrace,
religion, national origin, sex, marital status, or age.

SEC. 42. Board disapproval of directors, committee members, and senior

executive officers of insured paluwagan. - The Board shall have the power to
disapprove individuals who have been proposed to serve as directors,
committee members, or senj.or executive officers of insured paluwagan. It may
disapprove such individuals if they have been convicted of a crime with the

penalty of prision mayor or higher.

SEC. 43. Prompt Corrective Action - The Administration shall have the power
to take prompt corrective action to address problems of insured paluwagan
before they become insolvent. The Administration shall establish standards for

prompt corrective action, which shall include mandatory corrective actions for
paluwagan that fail to meet certain thresholds. The Administration shall also
have the power to require additional supervisory actions and/or take
couservatorship or liquidation actions as necessary to the continued economic
viability of the paluwagan.

SEC. 44. Temporary Stabilization Fund - The Adnrinistration shall establish a

Temporary Stabilization Fund to provide assistance to insured paluwagaus in
danger of insolvency.

SEC. 45. Certified statement - For each calendar year, in the case of insured

paluwagan with total assets of not more than 50 million, and bi-armually for
insured paluwagan with more than 50 million pesos, an insured paluwagan
shall file with the Board, at such time as the Board prescribes, a certified
statement showing the total amount of insured member's contributions at the
close of the relevant period, and the amount of insurance charge due to the
Fundforthatperiod,basedontheprescribedcomputationasmaybeprovided
by the Board.
The Treasurer of the paluwagan shall certify, with respect to each statement
required to be filed with Board pursuant to this section, that to the best of his
or her knowledge and belief the statement is true, correct, complete, and in
accordance with this Act.

CHAPTER VIII
Taxation

SEC. 46. Grant of tax exemption. - Notwithstanding the provisions of any law
or regulation to the contrary, p¢Z"zo¢g¢ro shall enjoy the following tax
exemptions:

1. Any p¢Zctw¢g#7t shall be exempt from payment of tax in respect to all income
it receives, including interest on its deposits with any financial
institution: ProzJz.ded, JiozoezJer, That income derived from any of its

properties, real or personal, or any activity conducted ,for profit, regardless

of the disposition thereof, is subject to the corresponding internal revenue
taxes imposed under the National Internal Revenue Code.

Interest on member's contribution of members with any pflzwzo¢gflH as well

as the shares of its members from the net income Of the pez#zong## shall be
exempt from income tax.

2. Any p¢Z#co¢g¢ra duly registered with the Administration shall be exempt

from the payment of value-added tax and documentary stamp taxes;
3. Any p¢Zwzung¢7z, regardless of the amount of accumulated reserves and
undivided net savings shall be exempt from paymeht of local taxes. Fees
and charges assessed by the cities or municipalities on the application of
mayor's or local business permits, and other licenses and approvals shall in
no case exceed php 3,000. I

CHARER IX
Confidential nature of capital contributions
SEC. 47. Prohibition against inquiry into or disclosure of contributions. - All
capital contributions or all money deposited with a pflz#zong¢7t in the
Philippines are hereby considered as of an absolutely confidential nature and
may not be examined, inquired or looked into by any person, government
official, bureau or office, except upon written permission of the member, or in
cases of impeachment, or upon order of a competent court in cases of bribery
orderelictionofdutyofpublicofficials,orincaseswherethemoneydeposited
or invested is the subject matter of litigation.

It shall be unlawful for any official or employee of a p¢Z#zu¢g#7t to disclose to

anypersonanyinformationconcemingsaidcapitalcontributious,exceptinthe
cases mentioned in the preceding paragraph of this Section. Any official or
employee of an Association who violates this Sec. shall be punished under
Republic Act No. 1405, as amended.

CHARER IX
Offenses

SEC. 48. Refusal to Make Reports or Permit Examination. - Any trustee,

corporate officer, or employee of any p¢Z#cong¢7i within the purview Of this Act
who, being required in writing by the Administration, willfully refuses to file
the required report or permit any lawful examination into the affairs Of such

p¢Z#zo¢gow shall be punished by a fine of not less than Fifty thousand pesos
(P50,000) nor more than One hundred thousand pesos (P100,000) or by
imprisonmentofnotlessthanone(1)yearnormorethanfive(5)years,orboth,
in the discretion of the court.

SEC. 49. False Statement. -The willful making of a 'false or misleading

statement on material fact before the Administration or any of its authorized
representatives shall be punished by a fine of not less than One hundred
thousand pesos (P100,000) nor more than Two hundred thousand pesos

(P200,000), or by imprisonment of not more than (5) years, or both, at the

discretion of the court.
SEC. 50. Proceedings Upon Violation of this Act and Other Laws, Rules,
Regulations, Orders or Instructions. - Whenever a p¢Z#zo¢g#7t willfully violates
this Act or any other order, instruction, rule or regulation issued by the
Administration, the person or persons responsible for such violation shall
unless otherwise provided in this Act be punished by a fine of not less than
Fifty thousand pesos (P50,000) nor more than Five hundred thousand pesos

(P500,000) or by imprisorment of not less than two (2) years nor more than ten
(10) years, or both, at the discretion of the court.

SEC. 51. Administrative Sanctions. -Without prejudice to the criminal

sanctions against the culpable persons, the Administration may, at its
discretion, impose upon any p¢Z#congq# their trustees and/or officers, for any
willful violation of its charter or by-laws, willful delay in the submission of
reports or publications thereof as required by law, rules and regulations; any
refusal to permit examination into the affairs of the pflz#zo¢gr#, any willful
making of a false or misleading statement to the Board or its committees or its
representatives; any willful failure or refusal to comply with, or violation of
any law, or any order, instruction or regulation issued by the Board, or any
commission of irregularities, and/or conducting business in an unsafe or
unsound manner as may be determined by the Board, the following
administrative sanctions, whenever applicable:

(a) fines in amounts as may be determined by the Board to be

appropriate, but in no case to exceed one thousand pesos (P1,000) a day
for each violation, taking into consideration the attendant
circumstances, such as the nature and gravity of the violation or
irregularity and the size of the pflz#zo¢g#7i;

(b) suspension of operations or authority to accept new contributions,

grant new loans, and make new investments;

(c) suspension of authority to enter into new contracts

(d) revocation of registration

Resignation or termination from office shall not exempt such trustee or officer
from administrative or criminal sanctions.

The Board may, whenever warranted by circumstances, preventively suspend

any trustee or officer of a p¢Z#zong## pending an investigation: Provided, That
shouldthecasebenotfinallydecidedbytheAdministrationwithinaperiodof
one hundred twenty (120) days after the date of suspension, said trustee or
officer shall be reinstated in his position: Provided, further, That when the
delay in the disposition of the case is due to the fault, negligence or petition of
thetrusteeorofficer,theperiodofdelayshallnotbecountedincomputingthe

period of suspension herein provided.

Whether or not there is an administrative proceeding, if the institution and/or

thetrusteesand/orofficersconcemedcontinuewithorotherwisepersistinthe
commissionoftheindicatedpracticeorviolation,theBoardmayissueanorder
requiring the institution and/or the trustees and/ or officers concerned to cease
and desist from the indicated practice or violation, and may further order that
immediateactionbetakentocorrecttheconditiousresultingfromsuchpractice
or violation. The cease and desist order shall be immediately effective upon
service on the respondents.

CHAPTER VII
Capacity-building

SEC. 52. Capacity-building. - The Board is authorized to conduct directly, or

to make grants to or contracts with colleges or universities, state or local
educational agencies, or other appropriate public or private non-profit
organizations to conduct, programs for the training of persons engaged, or

preparing to engage, in the operation of pflz"zu¢gfl7t, and in related couuseling

programs.

It is authorized to establish a program of experimental, developmental,

demonstration, and pilot projects, either directly or by grants to public or
private nonprofit organizations, or by contracts with such organizations or
other private organizations, designed to promote more effective operation of

p¢Z#zung¢7!, and related consumer counseling programs.

In carrying out its authority under this paragraph, the Board shall consult with
officials of appropriate agencies responsible for the administration of such

programs and projects.

Additionally, the Board, in collaboration with public and private sector

partners as needed, microcredit, financial literacy, and entrepreneurship

programs to the public on a continuing basis.

CHAPTER VIII
Miscellaneous Provisions

SEC.53.Appropriations.-Theinitialamountnecessaryfortheimplementation
of this Act shall be included in the General Appropriations Act.

SEC.54.ImplementingRulesandRegulation.-Forthepurposeofcarryingthe
objectives of this Act, the Administration is authorized to require the services
and facilities of any department or instrumentality of the goverrment or any
officer or employee of any such department or instrumentality, to promulgate
the necessary rules and regulations within 60 days from the effectivity of this
Act. The rules and regulations issued pursuant to this section shall take effect
thirty (30) days after its publication in two (2) national newspapers of general
circulation.

SEC. 55. Separability clause - If any provision of this Act or the application
thereof to any persons or circumstances is held uncoustitutional, the other

provisions of this Act and the application of such provisions to other persons
and circumstances, shall not be affected thereby.
 SEC.56. Repealing clause. - AIl laws, decrees, proclamations, issuances, or
ordinances that are contrary to or inconsistent with the provisions of this
act are hereby amended, repealed or modified accordingly.

SEC. 57 . Effectivity. - This Act shall take effect fifteen (15) days following the
completion of its publication in the Official Gazette or in two (2) national
newspapers of general circulation.

Approved,